The expense recognition (matching) principle permits the use of the direct write-off method of accounting for uncollectible accounts when bad debts are very large in relation to a company's other financial statement items such as sales and net income.

Question

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The direct write-off method of accounting for uncollectible accounts violates the matching principle because expenses are not recognized in the same period as the related revenues. Instead, the allowance method is used to estimate and record expected bad debts in the same period as the related sales revenue.

The Expense Recognition (Matching) Principle Permits the Use of the Direct